May 24, 2005

May 24, 2005

TERADYON, ISRAEL - May 24, 2005 - B.O.S. Better On-Line Solutions Ltd. ("BOS" or the "Company") (NASDAQ: BOSC, TASE: BOSC), announced today that it has entered into a Share Purchase Agreement (the "Purchase Agreement"), under which the Company shall issue and sell to certain investors in a private placement offering in Israel and Europe, up to approximately 1,087,000 Ordinary Shares at a price of $2.30 per share (reflecting an aggregate investment of up to $2,500,000), and warrants reflecting a 60% warrant coverage, exercisable for three years from their date of issuance. The net proceeds from the offering will be used to strengthen the Company's balance sheet and for general corporate purposes.

The initial investor is Catalyst Fund L.P. ("Catalyst"), which is currently the Company's largest shareholder, with share holdings amounting to approximately 19.58%. Catalyst has committed to an investment of $800,000, provided that its holdings (shares and warrants) after the transaction shall not exceed 24.99% of the Company's then outstanding share capital. In the event that the aggregate investment amount in the Company will be lower than $2,500,000, Catalyst's investment shall be reduced, in order not to exceed the abovementioned 24.99% limit. Additional investors may be added to the transaction (on the same terms and conditions) within 30 days from the signing of the Purchase Agreement, provided that the total investment in the Company shall not exceed $2,500,000 and that no additional investor shall be issued shares amounting to more than 5% of the Company's total outstanding share capital post-transaction. The closing of the transaction is subject to certain closing conditions, including the approval of the shareholders of the Company.

The Company also entered into a Registration Rights Agreement pursuant to which the Company agreed to prepare and file with the Securities and Exchange Commission a registration statement covering the resale of the Ordinary Shares issued to the investors.

The Company considered, inter alia, a fairness opinion prepared by BDO Ziv Haft. The price of $2.30 per share approved by the Company is, according to the fairness opinion, at the lower end of the price range, at which the transaction is fair to the Company.

For additional information, see the Company's Form 6-K filed with the Securities and Exchange Commission.

About BOS

B.O.S. Better On-line Solutions Ltd. (the "Company" or "BOS") (NASDAQ: BOSC ; TASE:BOSC) was established in 1990. BOS develops and markets innovative products that improve enterprise communications and operations. Its activities are focused on three domains:

  • Communications products - providing easy to install and affordable VoIP and cellular gateways solutions for businesses. BOS communications products leverage existing infrastructure, radically reduce costs and facilitate operations.
  • Connectivity products marketed under the BOSaNOVA brand name. These products deliver instant and transparent connectivity from IBM iSeries computers to personal computers, thin clients and browsers.
  • Software utilities solutions for the design, distribution and management of documents for a range of operating systems, including mainframe, iSeries, Linux, UNIX, and for various enterprise applications - ERP, CRM, financial and healthcare applications.
    In addition BOS supplies electronic and RFID components and technology design services through the ODEM Division, based on Odem Electronic Technologies 1992 Ltd., in which a controlling stake was recently acquired.

BOS, www.boscorporate.com is traded on NASDAQ (NASDAQ: BOSC) and on the Tel-Aviv stock exchange (TASE: BOSC).

For further information, please contact:
Mrs. Shiri Alony
Gelbart-Kahana Public Relations &Investors Relations
Tel. +972-3-6074717 ext.3, e-Mail: shiri@gk-biz.com

The forward-looking statements contained herein reflect management's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of which are beyond the control of BOS, including, but not limited to, those risks and uncertainties detailed in BOS' periodic reports and registration statements filed with the U.S. Securities Exchange Commission. BOS undertakes no obligation to publicly update or revise any such forward-looking statements to reflect any change in its expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

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